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Should we internalize intertemporal production externalities in the case of pest resistance?

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  • Martin, Elsa
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    Abstract

    Pesticides efficiency decreases with their global application by farmers. Within a strategic dynamic framework, this results in a classic intertemporal production externality. We analyze tax and subsidy schemes that can be used in order to internalize this externality. We show that they are able to restore socially optimal solution at a given period of time but that final time of pesticide use differs. With these schemes, farmers have a tendency to switch to alternative pest-control technology earlier than is optimal. A lump-sum transfer is shown to be necessary to obtain a switching time equal to the socially optimal one, for the subsidy case only. Furthermore, the socially optimal switching time can be later than the one obtained under a situation without control.

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    Bibliographic Info

    Paper provided by Agricultural and Applied Economics Association in its series 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. with number 153739.

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    Date of creation: 2013
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    Handle: RePEc:ags:aaea13:153739

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    Keywords: stock externality; pest resistance; technology change; Resource /Energy Economics and Policy; Q10; Q3; H23; C73;

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